The residential real estate market in China has been a hotly debated topic throughout 2014. Earlier this year, China witnessed strong annual increases in sale prices, giving homeowners and sellers in some parts of the country encouragement. At the same time, however, this has given many hopeful buyers a disadvantage.
Fortunately, the Chinese property market is showing signs of cooling, with sale price growth beginning to taper. For the third month in a row, prices dipped across some areas in China.
Real estate prices drop over July
Recently released information from the National Bureau of Statistics of China showed that sale prices for brand-new commercial residential buildings dropped over July. Interestingly, 64 out of 70 medium and large-sized cities felt this dip in prices. Meanwhile, sale prices for new dwellings increased in only two cities and remained the same in four cities.
Out of the increases in property prices, the highest recorded was 0.2 per cent month on month. On the other hand, the biggest drop was 2.5 per cent month on month.
For the established property market, price drops were seen in slightly more cities across China. In fact, 65 out of 70 medium to large-sized cities saw sale prices fall by as much as 1.5 per cent. Compared to June's results, this is a large leap from the 52 cities that experienced a dip in prices.
Over July, only one city out of 70 experienced an increase in sale prices, which was by a low 0.1 per cent.
All of this activity points to a slight cooling in the market, which could aid housing affordability for many buyers in the country.
In a 18 August Bloomberg article, Mizuho Securities Asia chief economist Shen Jian-guang explained some of the issues with the current market.
"The key issue is the mortgages, despite all types of local government easings. The high rate is damping sentiment of owner occupiers," he told Bloomberg.
"The falling trend of China's property market has no sign of improving."
Progress made on property registry
In a bid to keep track of property transactions and homeownership, the Chinese government plans to launch a property registry. Recently, the government issued its draft rules for this new initiative and is currently in the feedback stage.
According to a 18 August article from Dow Jones, this registry will go hand-in-hand with a new property tax system, which is expected to be introduced across China to discourage speculative purchases of real estate.
